Country Garden is one of a Chinese leading property development company. It is comprehensive high-tech enterprise which believes in creating beautiful living for the world. The company is committed to provide good community and houses for ones seeking better life. It is operating since over 20 years, and work towards different ways of urbanization. The company has taken the responsibility of developing real estate in over 1200 towns. The use of advance technology has helped the company in building green ecological buildings. The company worked towards modern urban cities, Forest cities and many other towns. The company is growing successfully (Country Garden, 2019).
The Company is working so enthusiastically and growing each day. It is important for it to analyze the industrial competition level in order to maintain its success rate. The Porter five force model helps the company in identifying the industrial competition level. this further helps in making effective strategic decision. Here is the detailed Porter five forces analysis of Country Garden Holdings;
Bargaining Power of Buyers
Bargaining power of buyers is an important factor for the company when deciding the prices. It helps the company in analysing its position in the market in consumers’ eye. For country garden, its consumers’ bargaining power is weak to moderate. One of the main reasons for this is high switching cost. Houses and communities are expensive to build and bought. Consumers can not switch easily. Moreover, every consumer wants to live in a modern building, house or society. Modernization comes with a cost hence; buyer has to bear the expense of a good living. There are few choices available for consumers, which lowers their bargaining power (Barashkova, 2018).
Bargaining Power of Suppliers
Bargaining power of suppliers in the construction or real estate industry is high. Because of the raw materials provided by them are expensive and suppliers are less than buyers. Moreover, the bargaining power of the land holders is high. The land is mainly belongs to the nation. The Company garden has to purchase the tenure as being developer. As the supply of land is limited, bargaining power of the supplier increases. However, Country garden is operating in the industry for two decades, but still it has to bear the high cost of acquisition of land. However, company is able to maintain good relationship with other raw material’s supplier to achieve economies of scale (Zhang and Ren, 2006).
Threats of New Entrants
Threats from the new entrants in this industry is moderate to high. Real estate industry requires high capitalisation. It needs to buy a land, then raw materials, and the whole process goes on. The new entrant as to build effective supply chain and distribution networks to gain economies of scales. The company needs to attract new consumers to sell its houses and buildings. It is necessary for the new entrants to follow the strict rules and policies set by the government. the new entrants have to take several risks, and consistency in order to survive in the industry (Barashkova, 2018).
Threats from the Substitute Products
Threats from the substitute products are high for Country Garden Holdings. This is mainly because of the changes in the consumer needs and demands. This is greatly influenced by the purchasing power of the people. More the income, higher will be the living standard, and so the business of Country Garden will be successful. However, those who have low income will switch towards substitute. The changes in the consumption of automobiles also influence this threat. More the pollution and traffic because of automobiles, People wants to live in a quiet place, away from the traffic noise. if the Country garden builds houses only in commercial areas, people will switch to substitutes, like in urban areas with peace and quiet (Zhang and Ren, 2006).
Rivalry of Existing Players
Country Garden Holding is working in the real estate industry and believe in providing good and modern houses to the people. The company is facing competition from the competitors in China like China Vanke CO, Evergrande real estate group etc. These companies are giving tough competition to each other. It is necessary for the Country Garden to build new and most innovative houses to stand odd one out. It should attract more consumers and should maintain its strong brand image (D&B Hoovers, 2019).
References
Barashkova, E. 2018. Analysis of Construction Company’s Competitiveness Factors and Development of Its Competitive Strategy. [Online], Available at: file:///C:/Users/CC/Dropbox/Business%20Law/F1-DP-2018-Barashkova-Ekaterina-Analysis%20of%20Construction%20Company’s%20Competitiveness%20Factors%20and%20Development%20of%20Its%20Competitive%20Strategy.pdf, [Accessed on: 1st December, 2019].
Country Garden, 2019. What we are? [Online], Available at: http://www.countrygarden.com.cn/about.aspx, [Accessed on: 1st December, 2019].
D&B hoovers. 2019. COUNTRY GARDEN HOLDINGS COMPANY LIMITED. [Online], Available at: http://www.hoovers.com/company-information/cs/company-profile.country_garden_holdings_company_limited.22fd637cef271669.html?aka_re=1, [Accessed on: 1st December, 2019].
Zhang, G. and Ren, X, 2006. ANALYSIS OF THE COMPETITION ENVIRONMENT FOR REAL ESTATES. [Online], Available at: file:///C:/Users/CC/Dropbox/Business%20Law/CIB5813.pdf, [Accessed on: 1st December, 2019].